Your Credit: Determining and Improving It

By Margaret Crane, Studio One Networks

Your credit score is like a financial SAT. It's created by assigning a number to each item of your credit history. It determines whether you will be approved for a loan and how much it will cost you to borrow money.

Your full credit history reflects whether you've been late paying debts and the total debt you carry, your credit card balances and how many times you've authorized lenders to check your history.

Different types of credit are also important. Do you have revolving credit such as credit cards or installment debt from personal loans?

Three national credit bureaus keep track of your credit history: Equifax, Experian, and Trans-Union Corporation. The score they give lenders is known as a FICO score, because it was invented by Fair, Isaac Corp.

Your credit score (based on 350 to 850) gives lenders a fairly accurate way to measure how likely you are to default on a loan. People with higher credit scores -- a better history -- don't have to pay as much interest on a mortgage and may have fewer fees to pay.

To avoid costly mistakes, pull a copy of your credit history each year. Typically, you'll pay around $8 for each copy of your own credit history. Or, you can log onto #IF($EnableExternalLinks)ww#COMMENT#ENDCOMMENTw.m#COMMENT#ENDCOMMENTyfico.c#COMMENT#ENDCOMMENTom#ELSEThe myFICO Website#ENDIF and pay $12.95 for your credit history, your credit score, and information on what to do to raise your credit score.

If you are turned down for a loan because of negative information contained in your credit history, you're entitled to a free copy of your credit report within 60 days. If there are mistakes on your credit history, immediately notify the credit bureau with proof, and request they be changed to reflect the truth.

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